A listing of instructor questions and my answers used in learning an online MBA.

Saturday, July 9, 2011

What is one way the U.S. legal system affects U.S. businesses? ...

What is one way the U.S. legal system affects U.S. businesses?How do specific aspects of the U.S. legal system contribute to furthering commerce?What would happen if that characteristic were not present?

The United States legislative and executive branches have authority to empower administrative agencies to enforce statutes enacted by Congress. This authority is based on the last line in Article 1, Section 8, which reads:

"The Congress shall have Power To... make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."

The Federal Trade Commission is one such agency whose original purpose was to break up and prevent monopolies; the commission now is involved in protecting consumers. I believe the FTC helps maintain healthy commerce by keeping competition within the marketplace for different industries alive, as well as protecting consumers from dangerous products or buying misrepresented goods. If such an agency were to not exist less consumers domestic and foreign would be more leery of buying American products, and significant losses would be experienced by consumers. Monopolies would stifle competition and innovation, and raise prices on their goods to the detriment of everyone else.

Another such agency made possible through US law is the US Postal Service. Unlike the FTC, the a postal service was explicitly authorized on the Constitution in Article 1 Section 8. The US postal service provides services such as certified mail, which is useful in mailing important business documents and also official assessments. The absence of the authority to empower administrative agencies would mean the absence of the USPS; the absence of the USPS would mean mail would cost more to send, and become even less attractive in the age of free communication via email.

The Farm Service Agency is yet another agency which affects U.S. farmers, providing them with financial safety nets in order to protect the agricultural sector. This agency also regulates the way farmers do business.

The above are only a small sampling of the agencies which have been created and administered based on the power to create Federal administrative agencies. The creation of such agencies is crucial to ensure smooth government function, as if no such agencies were created the Congress itself would have to administer all functions that these agencies now provide.